Before you make a major purchase, you might consider taking out a loan. A loan is a sum of money that a bank, government, company, or individual lends to another party. The recipient then repays the lender the amount they borrowed, plus interest. Most people find loans a necessary part of their financial plan to pay for their college education, home, or car.
Before you commit to a loan, however, there are three things you need to know:
- Interest Rate: Find out the percentage of interest that will be added to your principal sum, and how often interest will accrue. The interest could kick in right away, or may be deferred for six months. Your interest could compound monthly, or even daily, or be capitalized as a lump charge. The better your credit score is, the more likely you’ll see a better interest rate.
- How Long You Have: Know the time-frame in which you have to repay the borrowed amount, as well as the interest it accrued. You may have only six months, or as long as thirty years. This will change the amount you need to pay monthly.
- Is the Timing Right?: Once you understand what you will owe, after interest, and how long you have to repay your loan, assess your weekly budget. Make sure that you have enough room to continue saving for your other financial goals. If this major purchase is part of your well thought out financial plan, but you don’t feel you’ll be able to comfortably make your loan payments, consider increasing your income and debt-paying ability with a second career.
To learn more important facts about your financial decisions, including embarking on an exciting second career, visit the Syncis blog at https://www.syncis.com/blog/.